Getting a VA Mortgage When You’re Within 12 Months of ETS

Active military members nearing their separation or re-enlistment date will need additional documents regarding their future employment.

Contrary to some lingering misconceptions, the VA home loan program isn’t just open to veterans who’ve rejoined the civilian world. The reality is thousands of active military members use their VA mortgage benefits every year. In fact, about 30 percent of all VA borrowers are currently serving in the military.

Purchasing while still wearing the uniform isn’t typically a complicated process. But one circumstance in particular can make things a bit more difficult in some cases: Service members who are within 12 months of leaving the military or the end of their contract term.

The reasons ultimately relate to the fact that lenders want to ensure you’ve got stable, reliable income that’s likely to continue. Without a clear sense that you’ll be able to make your mortgage payments and handle this new financial obligation, lenders can’t take the risk of extending home financing.

Let’s take a closer look at how service members can purchase once they’re within 12 months of a ETS, EAOS or resigning of commission.

Continuing Your Service

When you’re within that window, lenders are generally thinking about two potential outcomes: You’re re-enlisting or otherwise extending your service or you’re leaving the military. Continuing your military service means your employment and income will continue, and that’s incredibly important.

In these cases lenders will want to see:

Documentation that you’ve already re-enlisted or extended your period of active duty beyond that 12-month period following the projected loan closing.

A statement that you intend to re-enlist or extend the period of active duty, along with a statement from your commanding officer confirming you’re eligible to do this. The CO must also make clear that there’s no reason to believe your re-enlistment or extension won’t be granted.

The bottom line is loan officers will want to see something official they can trust. The specific requirements may vary depending on the lender. Generally, once you’re able to provide these kinds of documents you can move forward with the VA mortgage process. Lenders will have confidence in the stability of your employment and the likelihood of continued income — income that you’ll need for that new monthly mortgage payment.

Separation and Employment

But what about service members who are separating and returning to the civilian world?

Every employment scenario is unique. Lenders will evaluate on a case-by-case basis, and requirements may vary from lender to lender.

This situation sets off immediate red flags with lenders for a pretty obvious reason: How will you pay the bills once you’re no longer in the military? The answer to this question is often going to make or break your chances of obtaining a VA loan at the present time.

Ideally, you already have a civilian job lined up and ready to go. In that case, you’ll likely need to show the lender a valid job offer letter or some other statement from the soon-to-be employer detailing your new job, your salary and other elements. As long as the lender feels there’s enough continuity between your MOS or previous work/education and your new job, you may be able to secure a VA home loan before you even spend a day in the civilian workforce.

Unfortunately, what’s more common — and more difficult — is that the service member isn’t heading straight into a new job from the military. Some may want to utilize their GI Bill benefits and start taking college classes. Others will hope to find employment after they’ve separated.

In these situations, prospective borrowers don’t have a source of stable and reliable income once their period of military service comes to a close. That’s going to make it tough to obtain a VA loan for those hoping to purchase within 12 months of their military release.

Retirees and VA Loans

One group of prospective VA homebuyers may not need to worry about their post-military employment: Retirees.

If you’re planning to retire from the military and from the working life all together, then your job prospects aren’t in play. Instead, it’s a matter of your retirement income streams and what you can qualify for based on them. You might also be able to close on your home before you first retirement payment depending on the documentation you can provide and the lender.

You can talk with a Veterans United loan specialist about your VA home purchasing time line at 855-870-8845.

A VA approved lender; Not endorsed or sponsored by the Dept. of Veterans Affairs or any government agency. We may share customer information with our trusted affiliates to assist you with your VA Loan. Customers with questions regarding our loan officers and their licensing may visit the Nationwide Mortgage Licensing System & Directory for more information.